Beijing, China – "Transit-oriented development,” or TOD — creating well-designed, walkable communities around a mass transit system, with a dense mix of housing, retail, offices or other amenities — is an increasingly important urban form.

When this type of development is done well, real estate market responds, generating substantial increase in property value. Such value can then be captured through Land Value Capture (LVC) mechanisms to finance transit as well as improvements around neighborhoods.

These two topics came together recently, and were discussed extensively at a workshop co-organized by the World Bank and the Institute of Comprehensive Transport of the National Development and Reform Commission, bringing together over 120 Chinese national and local government policymakers, urban and transport planners, transit agencies, private developers, researchers and international experts.

Why Transit-oriented Development & Land Value Capture matter

To kick off the workshop, the Chinese edition of a new World Bank publication titled “Transforming Cities with Transit” was presented by Sun Mingzheng, Deputy Chief Engineer of the Beijing Transport Research Center, which produced the Chinese translation of the book, and Hiroaki Suzuki, a World Bank lead urban specialist and main author of the book.

"Unprecedented opportunities have arisen for the successful integration of transit and land development in much of the developing world,” Suzuki said.

Jay Walder, CEO of MTR Corporation, Hong Kong, China, shared the Hong Kong experience which has “some unique lessons for the urbanization we are seeing today”.

"Hong Kong’s metro was built on what we now call the Rail plus Property Model,” he told the audience. “This not only provided the essential transit connections that the city desperately needed but it helped to address the housing problem that the city was facing as well.”

"New rail lines are financed over the long-term by providing the rail operator with land development rights along the alignment,” he explained.

Robert Cervero, Professor at UC Berkeley, gave a comprehensive overview of Transit-oriented Development, from its concept to how to successfully implement it.

Countries like China, which is rapidly urbanizing, modernizing and motorizing, are where TOD holds most promise, he pointed out. “Transit should be more than ‘mobility’ investments for relieving traffic congestion. Transit actually presents city-shaping opportunities, which should be exploited.”

Wataru Tanaka, chief urban planner and designer of Nikken Sekkei Ltd. shared Japan’s experience in rail-integrated urban development with examples from Tokyo and Yokohama, such as adding cultural functions to transit hubs, utilizing natural energy and creating a city identity with symbolic design.

Hong Kong’s metro was built on what we now call the Rail plus Property Model. This not only provided the essential transit connections that the city desperately needed but it helped to address the housing problem that the city was facing as well.

Jay WalderCEO of MTR Corporation, Hong Kong, China

Making Transit-oriented Development & Land Value Capture work for China

China’s current investment in transit is massive – 3,000 km of urban rail will be in operation in 2015, 6,000 km in 2020. "Thus, tremendous opportunities lie in Chinese cities to apply TOD and LVC around metro stations and high-speed railway stations,” said Sameh Naguib Wahba, World Bank Sector Manager for Urban Development & Resilience.

"Among the over 4,000 metro stations that will be in place in Chinese cities by 2020, at least 15 percent of them have potential to become new community hubs, if good TOD is applied,” said Gerald Ollivier, a senior infrastructure specialist with the Bank.

But to realize Transit-oriented Development and Land Value Capture, the challenges faced by Chinese cities are apparent, such as the poor coordination among metro companies and land developers, said John Bachmann, Director of AECOM’s China Sustainability Center.

The presentations by international experts provoked participants from Chinese cities to ponder and have heated roundtable discussions on how to overcome the challenges and grab the opportunities.

The good news is that some good practices are already emerging across China. Lin Qun, Director of Technical Committee, Shenzhen Urban Transport Planning Center and Bachmann with AECOM illustrated the cases of Shenzhen and Chengdu.

Take Luohu Hub of Shenzhen, where daily peak-hour traffic volume can reach 600,000 people per day, as an example. Parking was restricted in this hub so that more people would walk, bicycle and use transit instead of driving.

Another example given was the planned re-development of Shenzhen’s Central Business District, in which spatial, landscaping and transport functions will be integrated. With the construction of a complex dubbed “Eye of Shenzhen” that will host museums and galleries, the area will serve as a “creativity center” on top of a financial center, a transit hub and a link to the nearby Hong Kong.

Chinese cities see an increase of over 16 million cars a year.

"Solving the many problems in urban transport system lies in making public transit work," said Guo Xiaobei, Director of the Institute of Comprehensive Transport. "TOD and LVC are two meaningful solutions. With the global practices vividly presented today, we came to understand them better and have a clearer picture of the steps we’ll need to take to implement them,” he said.

The workshop was part of TransFORM, the joint China-World Bank Solution Platform for urban transport.